Two words are putting fear into agency and marketing executives, according to Advertising Age. The two words are "media rebates."
“The Association of National Advertisers reported in July the eye-opening results of a survey indicating that 28% of respondents are worried that media rebates — a reviled but tolerated practice overseas — are becoming more commonplace here,” the story reports. “The subject is so highly charged that numerous agency executives, while denying rebates are creeping into the U.S., would not do so on the record. But considering the source — a survey from an entity that represents 450 major marketers that spend $250 million annually — it’s a subject that can’t be ignored.”
The report adds: “While clients are increasingly suspicious about the practice, some observers suggest they might be driving it: The increased emphasis on procurement-driven cost cuts may have an unintended side effect: encouraging media rebates to rear their ugly heads on U.S. shores.
“Rebates, or, as they are sometimes more colorfully termed, ‘agency volume bonification’ (based on the word bonus), are loosely defined as an agency’s receipt of a volume discount or compensation from media buys that is not necessarily passed on to the client. But even some critics of rebates say they are a natural outgrowth of marketers’ efforts to squeeze agency costs.”
Click here to read this illuminating in-depth report in its entirety.